A few years ago developers claimed that “green” retail development was an unrealistic goal for retail development because multitenant projects can't be expected to meet U.S. Green Building Council (USGBC) criteria for Leadership in Energy and Environmental Design (LEED) certification. They argued it would be impossible to get a consensus among retail tenants subjected to modifying store designs, paying higher rents and replacing vendors to obtain recycled materials.

Then in 2005, the developers of Port Blakely Communities and its retail component Issaquah Highlands demonstrated that retail could achieve LEED certification when the 500,000-square-foot component received minimal LEED certification.

Cleveland-headquartered Forest City Enterprises and Atlanta-based developer Jim Jacoby followed with one-million-plus-square-feet projects: Northfield Stapleton in Denver and Atlantic Station in Atlanta, respectively. They qualified for Silver LEED-Core & Shell, a new LEED track that certifies the structure without qualifying space to be occupied by tenants.

Around the same time, Wal-Mart opened experimental LEED Platinum big-box stores in McKinney, Texas, and Aurora, Colo., outfitted with many green building features including onsite energy production. The company even turned them into educational tools displaying signage explaining the green technologies.

These milestones in green retail development didn't take place in California. But the Golden State is now positioned to take the lead in sustainable building policy with new state and local ordinances on the books or in the works encouraging the green practice.

Calabasas helped set the tone for the state when it began requiring LEED Silver certification for all commercial developments 50,000 square feet or larger two years ago. Now some of California's metropolises, including San Diego and San Francisco, are encouraging voluntary LEED certification by offering incentives to developers whose projects conform to the environmentally friendly criteria. San Diego offers reduced fees and both it and San Francisco fast track entitlements for green projects, depending on type and level.

Next year, Los Angeles is expected to adopt a green ordinance developed by city planners with the help of Silvia Saucedo, a Los Angeles land-use attorney with Greenberg Glusker. According to Saucedo, the proposed policy would require all new commercial or multifamily development with a minimum 50,000 square feet or 50 units to meet minimum standards for LEED certification. Developers submitting projects designed to meet LEED Silver or higher would qualify for an expedited entitlement process. The City of Angels, she notes, is creating a LEED-trained, cross-departmental green team to expedite the review of projects and ensure compliance. The team will also be charged with identifying any obstacles to green development and serve as a clearinghouse for projects, meeting weekly with developers to provide updates on the status of projects. Additionally, Los Angeles is considering implementing code changes that require green rooftops, permeable pavement and cisterns to collect and recycle rain runoff.

San Francisco, too, is considering a similar ordinance, but would expand it to include all commercial development 25,000 square feet or larger to meet a minimum of LEED Silver beginning in 2008. And by 2012, the LEED requirement would be raised to Gold, says Mark Palmer, LEED AP, the city's coordinator for Municipal Green Building. San Diego is also considering mandatory sustainability standards, as are smaller California cities. Culver City is working on policy changes so that it can qualify as a “sustainable city,” says Joe Susca, project manager in the Culver City Redevelopment Department. Among the requirements are photovoltaic solar panels for all new commercial projects. He adds, California governor Arnold Schwarzenegger has called for the installation of one million solar systems statewide and is offering incentive rebates totaling $3.2 million over the next 11 years.

Green makes cents

To complement its municipal energy utility, the city of Riverside is planning to offer incentives for users of photovoltaic solar panels, whose costs have decreased with rising demand. The city is proposing to pay half the the bill for users of solar panels; it will pay $3 of the $6-per-kilowatt-hour cost.

The 50 cities inside the Inland Empire, the largest region of Southern California, encompassing the counties of Riverside and San Bernardino, also are discussing code changes that require sustainable building practices. They are awaiting approval of recommendations from the Green Valley Initiative, a project spearheaded by local developer Ali Sahabi, master developer of the green Dos Lagos community in Corona, before moving ahead. The initiative, involving the collective support of some 250 community leaders, industry professionals, academics and environmentalists throughout the Inland Empire, is developing a sustainable building policy for the entire region.

Mike Flynn, an architect at Irvine, Calif.-based KTGY Group, Inc., expects most California governments to implement code changes that require some level of sustainability over the next five years. After all, with existing state environmental regulations, developers already are 50 percent to 60 percent on the way to LEED certification.

Tipton Housewright, principal at Dallas-based Omniplan Architects, is working with Macerich Co.'s Westcor unit on several redevelopment projects in California including a redevelopment project in Santa Monica. At Santa Monica Place, it is raising the roof in its transition from a mall to a 556,933-square-foot open-air center close to the beach.

“We're seeing certain components of LEED enforced now,” says Housewright. “Eventually, we expect cities will require compliance with the LEED umbrella.”

Local governments are more comfortable today with the idea of changing code to require sustainability, Flynn says. Most already require LEED standards for public buildings. Expanding the program to commercial sites is not that big a leap, especially with green building costs dropping all the time.

He estimates the cost of building green is now just a 2 percent premium above conventional building methods. The lower costs are tied to the increasing demand for expertise in green technologies and sustainable materials and products. At the same time, the prices of conventional materials have gone up. That has fueled improved building methodologies and increased availability of recycled and renewable building materials and products.

For example, Flynn notes, building suppliers in the Bay Area now only sell low-VOC (volatile organic compounds) building materials, whereas a few years ago, the availability of those materials was negligible. Local governments, too, are under pressure from the state to address water conservation and air pollution. California already requires onsite storm water management for large projects. And last year, it enacted legislation (AB 32) that requires local governments to implement policies by 2020 that reduce greenhouse gas emissions to 1990 levels.

While LEED certification is still voluntary, California state and utility mandates, in addition to new and revised building code requirements implemented over the last few years, have already made projects greener, notes Randy Jackson, president and principal at Costa Mesa based The Planning Center. “With compliance to codes and regulations, developers are finding themselves doing green whether planned or not.” He foresees California development will go green over time, and someday developers will find themselves instinctively adopting LEED principles. For example, state code already requires use of low-energy lighting and water-efficient fixtures. And regulations call for non-invasive and drought-resistant native plant materials for landscapes and onsite water retention and management systems that conserve and recycle water. They include bioswales, which are ditches constructed with rocks, sand and native plants that collect and cleanse runoff naturally before it reaches the aquifer.

Also, some cities are beginning to address the “dark sky” issue, notes Leslee Temple, vice president and CFO at Orange County, Calif.-based NUVIS Landscape Architecture and Planning. It directs developers to use lighting in parking lots and other public places that is “night sky compatible,” providing adequate candlepower without traveling up through the atmosphere and lighting up the night sky. While sustainable development affords projects operations tremendous efficiencies, she says, the cost is in line with conventional methods, and that has moved developers to embrace it. Housewright agrees, saying “Owners are much more willing to talk about it (LEED) if there is a negligible impact on the budget. We get a lot more interest if it involves a 1 percent to 2 percent premium on overall cost, because developers understand the operating cost payback. It's when the cost gets up to 6 percent or 7 percent — that's when they back off,” he adds.

Right left coast

NUVIS recently completed landscaping the Crossings at Corona, a 1.2-million-square-foot regional shopping center in Corona by Bakersfield developer Castle & Cooke. Temple notes that landscaping strategies incorporated at the Crossings included development of ecological features including reduced water consumption, usage of recycled materials, restoration of sensitive habitat areas using pathway and garden environments to provide shade. And, it is not just governments and developers who are on board. The concept of green has gone from being a fringe issue to the mainstream. “The industry is keeping pace with demand,” Temple says. “There's hardly anything that isn't recyclable anymore. It's amazing what those tree-huggers are doing with technology, bringing sustainable living up to the standards we're used to.”

With California governments nearing the next step in environmental reform, retail developers working in California are not only incorporating sustainable development into their new projects but also into the firms' corporate goals. Take Westfield, which recently announced two projects that are being planned on sustainable building principals, Westfield Village at Topanga, a 550,000-square-foot open-air shopping center in the Woodlands Hills area of Los Angeles and the 750,000-square-foot expansion of Westfield UTC shopping center in San Diego. The UTC expansion is a pilot project for the new LEED for Neighborhood Development program, which recognizes projects that successfully integrate principles of smart growth, urbanism and green building into a neighborhood design. When completed, UTC is expected to be the largest LEED-certified regional shopping center in California

Westfield, an Australian company, has been moving in this direction for some time according to a company spokesperson. The company sees UTC as the quintessential example of a regional mall redeveloped using sustainable practices. “The new UTC can be a model for green development in the shopping center industry,” says Jonathan Bradhurst, Westfield's senior vice president of development in San Diego. “Our customers have asked for a leading-edge experience that preserves the casual outdoor atmosphere, yet delivers more — with the latest concepts and prototypes for today and beyond.”

Besides Core & Shell and LEED for Neighborhoods, USBC is launching two new programs targeting retail development, says Flynn, suggesting that the goal is to make sustainable development multitenant friendly, by providing the developer control over buildout. The LEED for Retail-New Construction and Commercial Interiors pilot adapts LEED-rating criteria to the unique needs of retail development including site, lighting, security, energy and water.

With these innovations, Flynn says, more tenants will want to join the pack that includes Wal-Mart, Whole Foods and Target. “Because at the end of day, it's the right thing to do, and if you do it properly, it is economically viable and helps in the entitlement process.”